HONOUR CLAUSE

An honour clause states that the agreement is not a contract such as:

subject to the preparation of a formal contact.

If it is the intention of one or both parties not to make a binding agreement then that agreement cannot be a contract. If the parties to an agreement expressly declare that the agreement is binding in honour only there is no contract. A common clause states "subject to contract" or "subject to the preparation of a formal agreement".

The question to be asked in determining whether or not the agreement is a contract is "What was the intention of the parties?"